9 days ago
The Bulwark
After allowing inflation to surge to a multi-decade high of 9.1 percent by means of an overly expansive monetary policy, the Fed has now dramatically reversed course. One way it could be botched would be if the Fed were to ignore the fact that monetary policy operates with long lags, and were it to keep monetary policy too tight for too long. Unfortunately the Fed shows no sign of pivoting away from its newfound monetary policy religion. He also keeps telling us that next year—2024—is the earliest date at which interest rates could be cut. Knowing that such cuts are anathema to President Biden, it is difficult to see how a protracted debt ceiling fight is to be avoided.
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